Key benchmark indices settled almost unchanged for the day after witnessing intraday gyrations as investors reduced bets on future rate cuts from the central bank after hawkish comments from Reserve Bank of India governor D Subbarao on Monday, 16 July 2012, on inflation. The barometer index, BSE Sensex, was up 1.99 points or 0.01%, off close to 130 points from the day`s high and up about 30 points from the day`s low. The market breadth was weak. BSE Small-Cap and Mid-Cap indices dropped. Index heavyweight Reliance Industries (RIL) edged lower in volatile trade. But, another index heavyweight and cigarette maker ITC edged higher.
The Sensex has lost 324.68 points or 1.86% in this month so far (till 17 July 2012). The Sensex has jumped 1,650.38 points or 10.67% in calendar 2012 so far (till 17 July 2012). From a 52-week low of 15,135.86 on 20 December 2011, the Sensex has risen 1,969.44 points or 13.01%. From a 52-week high of 18,944.60 on 26 July 2011, the Sensex has lost 1,839.30 points or 9.7%.
Coming back to today`s trade, most auto stocks fell on speculation the government will raise fuel prices after presidential election on July 19 or after the appointment of new vice president on August 7. PSU OMCs rose on speculation the government will raise fuel prices shortly. Aviation shares declined after public sector oil marketing companies on Monday, 16 July 2012, hiked jet fuel prices. Software stocks were mostly lower, with Infosys hitting 52-week low. Axis Bank dropped as the bank`s latest results showed its gross non-performing assets rose in Q1 June 2012.
The market opened on a firm note on higher Asian stocks. Firmness continued in morning trade. The market pared gains in mid-morning trade. A bout of volatility was witnessed as key benchmark indices further pared intraday gains to hit fresh intraday lows in early afternoon trade. Volatility continued as key benchmark indices recovered soon after erasing almost entire intraday gains in afternoon trade. The market retained positive zone in mid-afternoon trade. The market slipped into the red in choppy late trading session. The Sensex and the 50-unit S&P CNX Nifty hit their lowest level in more than 2-1/2 weeks.
The BSE Sensex rose 1.99 points or 0.01% to settle at 17,105.30, its highest closing level since 13 July 2012. The index jumped 132.77 points at the day`s high of 17,236.08 at the onset of the trading session. The index fell 28.68 points at the day`s low of 17,074.63 in late trade, its lowest level since 28 June 2012.
The S&P CNX Nifty shed 4.40 points or 0.08% to settle at 5,192.85, its lowest closing level since 28 June 2012. The Nifty hit an intraday low of 5,181.70. The index hit an intraday high of 5,236.70.
The BSE Mid-Cap index fell 0.82% and the BSE Small-Cap index declined 0.86%. Both these indices underperformed the Sensex.
The total turnover on BSE amounted to Rs 1743 crore, lower than Rs 1838.06 crore on Monday, 16 July 2012.
The market breadth, indicating the overall health of the market, was weak. On BSE, 1,763 shares declined and 1,044 shares gained. A total of 117 shares were unchanged.
From the 30-share Sensex pack, 17 stocks declined and the rest of them gained.
Index heavyweight Reliance Industries (RIL) shed 0.16% to Rs 719.15. The stock was volatile. The scrip hit high of Rs 727.85 and low of Rs 717.30. RIL has bought back 3.47 crore shares for about Rs 2484 crore till 10 July 2012 under its ongoing share buyback program. RIL has set maximum buyback price of Rs 870 per share. The company has set aside Rs 10440 crore for share buyback. The buyback program opened on 1 February 2012 and closes on 19 January 2013. Last month, RIL chairman Mukesh Ambani said at the company`s Annual General Meeting in Mumbai that the company`s buyback program represents a highly accretive use of cash by the company and it will supplement earnings growth from operations, for higher EPS (earnings per share), in the near future.
Index heavyweight and cigarette maker ITC rose 1.37%.
Among other FMCG stocks, Hindustan Unilever, Marico, and Dabur India rose by between 0.91% to 1.74%.
Most auto stocks fell on speculation the government will raise fuel prices after presidential election on July 19 or after the appointment of new vice president on August 7.
India`s largest commercial vehicle maker by sales Tata Motors fell 1.48%, with the stock extending Monday`s 2.63% slide. Tata Motors on Monday, 16 July 2012, said its global sales rose 6% to 94,055 vehicles in June 2012 over June 2011. Sales at its UK-based Jaguar Land Rover PLC unit surged 39% to 28,215 units. The company said sales of Jaguar sedans fell 5% to 3,829 vehicles, but those of Land Rover sport-utility vehicles climbed 49% to 24,386 units. Robust demand for Land Rover vehicles helped Tata Motors post a 7% increase in overall passenger car and SUV sales globally to 46,159 units. Sales of trucks and buses in June grew 6% to 47,896.
Sales of Tata-branded cars and SUVs in the past month fell 21% to 17,944 autos, it added. Tata Motors, like most of its peers, is battling weak demand for new cars and SUVs in its home market in India where expensive loans and fuel, prolonged inflationary pressures and an economic slowdown are keeping buyers away.
M&M dropped for the second day in a row on concerns lower rains this year may hit demand for tractors adversely. The stock was down 1.66%. M&M last week said it has suspended its plans to develop a vehicle for the US market due to changes in the US regulatory and market situation. M&M said it will continue to monitor the US situation and remain flexible with its approach to this market.
India`s largest car maker by sales Maruti Suzuki India slipped 0.52%. The company early this month said its total sales jumped 20.3% to 96,597 units in June 2012 over June 2011.
Automobile industry body -- the Society of Indian Automobile Manufacturers (SIAM) - on 10 July 2012, cut its forecast of domestic car sales for the year through March 2013 to 9%-11% from 10%-12% earlier. But it raised the guidance for total domestic car and sport-utility vehicle (SUV) sales to 11%-13% from 10%-12% due to expectations of higher SUV sales, most of which run on diesel. Sales of diesel cars and SUVs are surging as the price of diesel in India remains cheaper than petrol. In New Delhi diesel is 39% cheaper than petrol.
Commercial vehicles maker Ashok Leyland lost 0.21% to Rs 24.
Hero MotoCorp (HMCL) rose 0.16%. The company recently launched a 125 cubic-centimeter motorcycle Ignitor. The Ignitor motorcycle will be available in two versions, costing Rs 55,900 and Rs 57,900 at dealerships in New Delhi, the company said. The latest model follows the 110cc Maestro scooter, which was launched in March, and the 150cc Impulse motorcycle, introduced last October. The Ignitor will add to the Glamour and the Super Splendor -- the two 125cc motorcycle models sold currently by Hero MotoCorp. Hero MotoCorp sells motorcycles with 100cc to 225cc engines. It also sells two scooter models, including the Maestro.
Hero MotoCorp`s total sales rose 4.26% to 5,34,091 units in June 2012 over June 2011. With sales of 5,34,091 units in the month of June, HMCL`s cumulative sales for the first quarter (April-June) of this financial year (2012-13) has touched 16,42,292 units -- its highest-ever sales in any single quarter.
India`s second largest motorcycle maker by sales Bajaj Auto lost 2.43% to Rs 1447.15 ahead of its Q1 June 2012 result announcement tomorrow, 18 July 2012.
India`s second largest software services exporter by revenues, Infosys shed 0.08% to Rs 2,170.85. The stock hit 52-week low of Rs 2,163 in intraday trade today, 17 July 2012. The stock has witnessed a steep fall recently after the company revised downwards both earnings and revenue growth guidance for the year ending March 2013 (FY 2013) in dollar terms after reporting disappointing Q1 June 2012 results on 12 July 2012. The company has cut the guidance citing slower IT spends by large corporations due to challenging global economic situation.
India`s third largest software services exporter by revenue, Wipro, rose 1.91%. The company announces Q1 results on 24 July 2012.
India`s largest software services exporter by revenue, TCS shed 1.95%. The company said after market hours on Thursday, 12 July 2012, its consolidated net profit as per Indian GAAP jumped 14.6% to Rs 3318 crore on 12.1% growth in revenue to Rs 14869 crore in Q1 June 2012 over Q4 March 2012. Operating profit rose 10.8% to Rs 4077 crore in Q1 June 2012 over Q4 March 2012.
Consolidated net profit as per International Financial Reporting Standards (IFRS) rose 2.89% to $604 million on 3.02% growth in revenue to $2.728 billion in Q1 June 2012 over Q4 March 2012.
Bank stocks rose on renewed buying as data released on Monday showed the rate of growth in inflation based on the wholesale price index slowed in June 2012. India`s second biggest private sector bank in terms of branch network HDFC Bank rose 0.02%. The private sector bank said during market hours on Friday, 13 July 2012, its net profit jumped 30.6% to Rs 1417.40 crore on 34.3% growth in total income to Rs 9536.90 crore in Q1 June 2012 over Q1 June 2011. HDFC Bank`s operating expenses jumped 25.7% to Rs 1934.60 crore in Q1 June 2012 over Q1 June 2011. The core cost-to-income ratio rose to 49.2% in Q1 June 2012 from 48.3% in Q1 June 2011, the bank said in a statement.
The country`s biggest commercial bank in terms of branch network State Bank of India rose 0.2%. The bank has raised the rate of interest on NRE Rupee Term Deposits for tenor of 3 years to less than 5 years from 8.75% to 9% on deposits of less than Rs 15 lakhs with effect from 17 July 2012.
India`s largest private sector bank by net profit ICICI Bank gained 0.4%.
Axis Bank dropped 2.1% as the bank`s gross non-performing assets (NPA) stood at 1.06% of gross advances as on 30 June 2012, higher than 0.94% as on 31 March 2012. The net NPA ratio remained low. The NPA ratio was at 0.31% of net advances as on 30 June 2012, higher than 0.25% as on 31 March 2012.
The bank`s net profit rose 22.4% to Rs 1153.52 crore on 29.24% increase in total income to Rs 7,818.37 crore in Q1 June 2012 over Q1 June 2011. The surge in net profit was despite a 47.2% jump in provisions and contingencies to Rs 258.84 crore in Q1 June 2012 over Q1 June 2012. The bank announced the first quarter result during trading hours today, 17 July 2012.
Axis Bank`s capital adequacy ratio (CAR) stood at 13.03% as on 30 June 2012, lower than 13.66% as on 31 March 2012 and higher than 12.53% as on 30 June 2011.
Bajaj Finserv rose 0.26% after the company said during trading hours today, 17 July 2012, its consolidated profit after tax jumped 51% to Rs 195 crore on 12% growth in gross revenue to Rs 3252 crore in Q1 June 2012 over Q1 June 2011. Income from operations jumped 51% to Rs 927 crore in Q1 June 2012 over Q1 June 2011.
Hindalco Industries rose 1.14%. The company`s US unit -- Novelis -- on Monday, 16 July 2012, said it will establish a new organization for the procurement of used beverage cans (UBCs) in North America that will make the company the largest UBC buyer in the region. The announcement follows the company`s decision to withdraw from its Evermore joint venture with Alcoa effective August 31, 2012. Novelis will procure all UBCs for its recycling plants in Greensboro, GA, Berea, KY, and Oswego, NY, directly through the new organization.
"This move is in line with our global strategy to enhance our scrap procurement and recycling assets to support our goal of achieving 80% recycled content in our products by 2020. The ability to independently control our assets and manage our business will provide us with more flexibility to execute our strategic plans. This is the primary driver behind our exit of Evermore," said Derek Prichett, Vice President, Global Recycling for Novelis.
As the leading recycler of UBCs in North America and the world, Novelis currently buys the equivalent of 40 billion cans a year, worth an estimated $1 billion. Novelis expects its global consumption of UBCs to grow to more than 60 billion cans by 2015. Chris Anderson, currently supply chain manager for Evermore, will rejoin Novelis effective August 1, 2012, to lead the company`s new UBC procurement organization reporting to Silverio Colalancia, Director of Recycling, Novelis North America. In addition, the company anticipates that a number of current Evermore employees will join its new Atlanta-based organization, which will include buyers in strategic locations throughout North America. Novelis will continue to receive UBCs in North America exclusively through Evermore until August 31.
Sugar stocks declined after Monday`s gains triggered on reports the Food Ministry has proposed imposing 10% import duty on sugar. Bajaj Hindusthan, Balrampur Chini Mills and Shree Renuka Sugars dropped by between 2.2% to 5.31%.
The Food Ministry has reportedly proposed imposing 10% import duty on sugar as the country has surplus domestic production. The zero import duty regime expired on 30 June 2012. The government had scrapped import duty on sugar in February 2009 to boost domestic supply. Prior to that the import duty was 60%, suggest reports.
Shares of Cairn India rose 0.49% as US crude futures traded near the highest level in seven weeks amid speculation US stockpiles will decline and tension with Iran may escalate. Higher crude oil prices will result in higher realization from crude sales for oil exploration firms such as Cairn India.
Essar Oil declined 1.54%. The company said after market hours today that in response to the company`s petition in the Supreme Court on principal repayment schedule and waiver/remission of interest in the Sales Tax issue, the court has directed the company to pay Rs 1000 crore to the Gujarat state government towards sales tax/VAT dues by July 30th. Essar Oil had offered to pay this amount in its submission to the court. On payment of this amount of Rs 1000 crore, coercive steps already taken by state would be stayed, Essar Oil said in a statement.
As previously announced, Essar Oil is also in advanced discussions with Indian lenders with regard to putting in place a $1 billion (Rs 5000 crore) loan facility as a contingency measure for use in the event that the sales tax liability becomes payable immediately or that Essar Oil is not able to negotiate a satisfactory repayment schedule. Essar Oil said it expect this facility to be finalised shortly.
India`s largest engineering & construction firm by sales L&T dropped 0.39%. The company last week said it has inaugurated its manufacturing facility for switchgear products at Vadodara in Gujarat. The new switchgear facility is a part of L&T`s Electrical & Automation (E&A) business. L&T said the new facility will manufacture Air Circuit Breakers (ACBs) and Moulded Case Circuit Breakers (MCCBs). A development centre to provide research, development and engineering for circuit breakers will also be located at this facility, L&T said.
A smart mix of labour and automation has been deployed at the unit that would enhance productivity by 2.5 times, L&T said in a statement. The lines are equipped to produce circuit breakers of different frames and several ratings from 16A to 6300A.
Castrol India fell 2.45%, with the stock falling for the second straight day on profit booking. The company`s board at its meeting held on Monday, 16 July 2012, approved a liberal 1:1 bonus issue. The stock had surged over the past few weeks. The scrip jumped 15.61% to settle at Rs 555.25 on Friday, 13 July 2012, from a recent low of Rs 480.25 on 4 June 2012.
Pharma stocks rose for the second day in a row. Sun Pharmaceutical Industries, Ranbaxy Laboratories, and Dr Reddy`s Laboratories rose by between 0.15% to 1.67%.
Lupin fell 0.11% to Rs 570.40. The stock reversed direction after hitting a record high of Rs 582.50 in intraday trade today, 17 July 2012.
Cadila Healthcare jumped 4.74%. The company today, 17 July 2012, said that the US Food and Drug Administration has found the company`s facilities at Moraiya acceptable. The US FDA had in June 2011 issued a warning letter to Cadila, citing non-conformity of the facilities with the US FDA norms.
Aviation shares declined after public sector oil marketing companies on Monday, 16 July 2012, hiked jet fuel rates by 1.7% in line with firming international oil rates. Jet Airways (India) (down 3.71%) and SpiceJet (down 2.2%) edged lower. Kingfisher Airlines declined 2.82% to Rs 9.66. The stock hit a record low of Rs 9.62 in intraday trade today.
State-owned oil marketing companies (PSU OMCs) on Monday, 16 July 2012, hiked jet fuel rates by 1.7% in line with firming international oil rates. The price of aviation turbine fuel (ATF), or jet fuel, in Delhi was hiked by Rs 1,039.1 per kilolitre (kl), or 1.7%, to Rs 62,208.18. The hike comes on back of reductions in rates in six fortnights, including a steep 5% (Rs 3,260 per kl) cut effected from 16 June 2012 and about 2% (Rs 1,241 per kl) fall in prices from 1 July 2012.
ATF typically makes up almost half of an airline`s operating cost and the increase in prices will increase the burden of cash-strapped airlines. PSU OMCs revise jet fuel prices on the 1st and 16th of every month, based on the average international price in the preceding fortnight.
Directorate General of Civil Aviation (DGCA) has advised all airlines to ensure that the airfares remain within the fare band, Ministry of Civil Aviation said in a statement on Monday, 16 July 2012. In view of the media reports about increase in airfares over the last few days, the DGCA had done study of airfares and concluded that the airfare offered by various scheduled domestic airlines on different sectors remained within the fare bands available on their respective websites. In the last 15 to 20 days airfares of flights to and from Delhi have gone up on account of increased user development fee (UDF) and service tax. Fares for 14 days in advance of the journey are still available in the lowest fare buckets. Random monitoring of airfares by DGCA has not revealed an alarming trend.
PSU OMCs rose on speculation the government will raise fuel prices after presidential election on July 19 or after the appointment of new vice president on August 7. Indian Oil Corporation (IOC) rose 0.41% and HPCL gained 1.12%. But, BPCL dropped 2.8%.
Petroleum Planning and Analysis Cell (PPAC) under the Ministry of Petroleum and Natural Gas on Monday, 16 July 2012, said the under-recovery on HSD (High Speed Diesel) applicable for 2nd fortnight of July 2012 effective from 16 July 2012 has risen to Rs 9.95 a litre from Rs 9.18 a litre during previous fortnight. HPCL (down 0.79%) and BPCL (down 2.16%) fell. But, Indian Oil Corporation rose 0.11%.
In case of PDS Kerosene and Domestic LPG the under-recoveries remain the same at (Rs 27.20 a litre and Rs 319 per cylinder, respectively) for the month of July 2012. PSU OMCs are currently (effective 16 July 2012) incurring daily under-recovery of about Rs 358 crore on the sale of Diesel, PDS Kerosene and Domestic LPG.
PSU OMCs suffered under-recovery of Rs 138541 crore in the year ended 31 March 2012, which was sharply higher than under-recovery of Rs 78190 crore in the year ended 31 March 2011.
Shares of power generation firms fell across the board. Tata Power Company, Reliance Power, Reliance Infrastructure, Adani Power and NTPC shed by between 0.06% to 4.92%.
Kingfisher Airlines clocked highest volume of 46.78 lakh shares on BSE. Lanco Infratech (36.10 lakh shares), Cals Refineries (33.49 lakh shares), Vikas Wsp (31.89 lakh shares) and Suzlon Energy (29.78 lakh shares) were the other volume toppers in that order.
Axis Bank clocked highest turnover of Rs 72.83 crore on BSE. SBI (Rs 71.64 crore), Infosys (Rs 55.98 lakh shares), TCS (Rs 51.62 crore) and Tata Motors (Rs 46.84 crore) were the other turnover toppers in that order.
On the macro front, the annual rate of inflation based on monthly wholesale price index (WPI) eased to 7.25% (provisional) for the month of June 2012 (over June, 2011) from 7.55% (provisional) for the previous month and 9.51% during the corresponding month of the previous year. Build up inflation in the financial year so far (April-June 2012) was 1.99% compared to a build up of 2.41% in the corresponding period of the previous year, the Ministry of Commerce & Industry said in a statement. The official WPI for All Commodities for the month June 2012 rose 0.2% to 164.2 (provisional) from 163.9 (provisional) for the previous month, it said.
Inflation is way above the desired threshold level of Reserve Bank of India, central bank governor D Subbarao said on Monday. He added that the RBI stance of monetary policy is aimed at restraining demand and managing inflation expectations. "There is a threshold level of inflation. Below the threshold, may be, there is a trade-off between growth and inflation. But above the threshold, there is definitely no trade-off between growth and inflation," he said. "The Reserve Bank of India is sacrificing growth only in the short-term and there is no growth-inflation trade off in the medium term," he said. The RBI`s threshold level for inflation is around 5%, he said. However , the governor did issue a disclaimer that his statements did not imply RBI`s decision in its July 31 policy.
India`s potential growth rate may have fallen to around 7.5% as the uncertainty surrounding economic activity has increased after the financial crisis of 2008-09, Subbarao said in a speech on Tuesday.
The Reserve Bank of India (RBI) announces first quarter review of the Monetary Policy 2012-13 on 31 July 2012. The RBI unexpectedly left its key lending rate unchanged at its last meeting in June 2012, citing inflationary concerns.
The Central Statistics Office (CSO) will announce data on consumer price index (rural)/consumer price index (urban)/consumer price index (combined) for June 2012 tomorrow, 18 July 2012. On Friday, 20 July 2012, CSO will announce data on consumer price index (agricultural labourers/rural labourers) for June 2012.
Rainfall in the country till July 15 was 22% short of the long-term average, raising concerns that farm output may be hurt and could lead to a rise in food prices. It is a challenge for farmers to maintain the same performance compared with the last two years, Farm Minister Sharad Pawar said on Monday, 16 July 2012. The key agricultural states of Karnataka, Maharashtra and Andhra Pradesh have experienced the worst shortage of rain, Mr. Pawar said. Maharashtra is the country`s largest producer of sugar and second-biggest producer of soybeans, while Karnataka is the largest coffee producer and Andhra Pradesh one of the biggest rice producers.
The government has prepared contingency plans to help farmers increase output, Mr. Pawar said. The agriculture ministry has sent seeds for late sowing to areas that have received insufficient rain, he said. Steps have also been taken to provide sufficient quantities of seeds of rabi pulses to compensate for any loss in pulses production in the kharif season, he said.
According to data released by the Ministry of Agriculture, rice was sown in 96.79 lakh hectare (ha) till 13 July 2012, compared with 55.4 lakh ha a week back, but it still remains lower than 111.63 lakh ha during the corresponding period last year. Cumulative sowing of coarse cereals totaled 39.76 lakh ha as on 13 July 2012, sharply lower than 79.82 lakh ha during the corresponding period last year.
Sowing of pulses totaled 20.54 lakh ha as on 13 July 2012, much lower than 32.88 lakh ha during the corresponding period last year. Sowing of oilseeds totaled 67.7 lakh ha, lower than 78.33 lakh ha during the corresponding period last year. Sugarcane and cotton have been sown in more area than the area covered by these crops this time last year.
The monsoon rains--which make up around 70% of India`s annual rainfall--are crucial to the nation`s agriculture sector and broader economy. More than 60% of the country`s farmland is rain-fed. The timing, distribution and quantity of rainfall are all important for crops.
Prime Minister Dr. Manmohan Singh on Friday, 13 July 2012, approved the constitution of an expert committee on anti-avoidance tax proposal viz. the General Anti-Avoidance Rules (GAAR) to undertake stakeholder consultations and finalise the guidelines for GAAR by 30 September 2012.
Foreign direct investments in India fell 38% in the April-May period, according to central bank data which reflect the battering the country`s appeal has taken in the past few months. FDI flows into India in the first two months of the fiscal year which began April 1 dropped to $3.2 billion from $5.15 billion a year earlier. In May alone, net foreign direct investment more than halved from a year earlier to $1.38 billion, adding to worries about India`s current account deficit. India depends on capital inflows to finance its current account deficit, which widened to a record 4.5% of gross domestic product in the January-March period.
India`s trade deficit narrowed in June, helped by a sharp fall in imports, director-general of foreign trade Anup Pujari said on Friday, 13 July 2012. The trade deficit was $10.3 billion during the month, down from $14.4 billion a year earlier. Exports in June fell 5.45% from a year earlier to $25.1 billion while imports declined 13.46% to $35.3 billion due slide in crude oil prices.
An India-Mauritius joint panel will in August discuss a series of proposals to review the double taxation avoidance treaty between the two nations, Mauritius Foreign Minister Arvin Boolell said on Thursday, 5 July 2012. India has been looking to negotiate the double taxation avoidance agreement with Mauritius for the past few years to check so-called round tripping and other potential abuses. Round tripping entails moving money out of one country to another, and getting it back under the garb of foreign capital. Capital gains tax is close to zero in Mauritius and almost 40% of investments into India come through the island nation.
Under the bilateral agreement, capital gains from sale of securities can be taxed only in Mauritius. India and Mauritius will discuss the renegotiation of the tax pact between 22-24 August in Mauritius. The India-Mauritius joint working group will also discuss the inclusion of a so-called limitation of benefit clause, similar to the Singapore tax treaty with India, to ensure only genuine Mauritius-based companies are benefited. India`s tax agreement with Singapore says that only those companies that spend a minimum of $200,000 (about Rs 1 crore) in Singapore can avail the benefits of the treaty.
Sanctity of tax residency certificates issued by a country to companies operating in its jurisdiction to enable the firms to claim tax benefits under various treaties is another issue between India and Mauritius. While India in this year`s national budget said the certificates are a necessary but not sufficient condition, Mauritius wants those issued by it honoured.
Draft guidelines issued by Indian government for implementing the controversial anti-avoidance tax proposal viz. the GAAR state that GAAR provisions should be invoked on a foreign institutional investor (FII), if it chooses to take a treaty benefit, but would not in any case be invoked in the case of the non-resident investors of the FII. The draft guidelines suggested that the onus of proving wrongdoing should be on the authorities.
Prime Minister Dr. Manmohan Singh said in a newspaper interview this month that he has identified controlling the fiscal deficit, achieving clarity on tax matters, reviving the mutual funds and insurance industries, clearing a backlog of foreign investment proposals and boosting infrastructure as his focus areas in the short term. Singh said there will be no arbitrariness in tax matters. The statement assumes significance in the context of a raging controversy over the Income Tax amendment to re-open tax demands with retrospective effect from companies like Vodafone over acquisition of companies having operations in India but registered abroad to avoid taxes.
Singh last month said he is chalking out plan for the country`s economic revival. Singh last month took additional charge at the finance ministry after Pranab Mukherjee resigned as finance minister on 26 June 2012 to contest the presidential polls scheduled on Thursday, 19 July 2012. Mr. Mukherjee is the leading contender in the July 19 presidential election, having been nominated by the Congress party-led United Progressive Alliance government for the largely ceremonial post.
Corporate affairs minister Veerappa Moily said in a newspaper interview published on 11 July 2012 that the government is hopeful of the passage of the pension bill in the monsoon session of parliament. The monsoon session of parliament begins on 7 August 2012.
The first quarter June 2012 earnings season has just begun. In the next one month, investors and analysts will closely watch the management commentary that would accompany the result to see if there is any revision in their future earnings forecast of the company for the current year or the next year. A deceleration in top line growth of India Inc amid economic slowdown and slowdown in investment cycle will weigh on bottom line growth in Q1 June 2012 as the core operating profit margin could be negatively impacted by deceleration in top line growth.
Bajaj Auto reports Q1 results tomorrow, 18 July 2012. Kotak Mahindra Bank, Hero MotoCorp and Dr Reddy`s Laboratories unveil Q1 results on Thursday, 19 July 2012. Reliance Industries and Asian Paints unveil Q1 results on Friday, 20 July 2012. Hindustan Unilever, L&T and Cairn India unveil Q1 results on 23 July 2012. Wipro, Sesa Goa and Jindal Steel & Power unveil Q1 results on 24 July 2012. GAIL (India) and Power Grid Corporation of India unveil Q1 results on 25 July 2012. HCL Technologies announces Q4 June 2012 results on the same day.
ITC, Bhel and Sterlite Industries (India) unveil Q1 results on 26 July 2012. Cement majors ACC and Ambuja Cements unveil Q2 June 2012 results on the same day. ICICI Bank, Grasim Industries, NTPC and Punjab National Bank unveil Q1 results on 27 July 2012. Maruti Suzuki India announces Q1 results on 28 July 2012. Mahindra & Mahindra announces Q1 results on 8 August 2012. Ranbaxy Laboratories announces Q2 June 2012 results on 9 August 2012. BPCL announces Q1 results on 10 August 2012. Hindalco Industries announces Q1 results on 14 August 2012.
Most European stock markets edged higher on Thursday, as investors awaited testimony from US Federal Reserve Chairman Ben Bernanke later in the day for any hints of further stimulus. Key benchmark indices in France and Germany rose by between 0.22% to 0.41%. UK`s FTSE 100 shed 0.53%.
Spanish borrowing costs dropped sharply as the country`s government on Tuesday sold 3.56 billion euros ($4.37 billion) of 12-month and 18-month bills at an auction, exceeding its 3.5 billion euro target, according to media reports. Yields on the 12-month bill averaged 3.918%, down from 5.074% from the previous auction in June, while the bid-to-cover ratio improved to 2.23 from 2.16. For the 18-month bill, the average yield dropped to 4.242% from 5.107% at a June auction. The bid-to-cover ratio fell to 3.66 from 4.42.
The short-term debt sale comes before key auctions of up to 3 billion euros of medium- and longer-dated bonds from the Treasury on Thursday, 19 July 2012, when the Spanish government will sell bonds maturing in 2014, 2017, and 2019. The auction comes ahead of a meeting of European officials scheduled on Friday, 20 July 2012, to hammer out the final details of the Spanish bank bailout.
The Center for European Economic Research, or ZEW, said Tuesday that its index of German investor expectations fell to minus 19.6 in July from minus 16.9 in June. "The decline of the economic expectations concerning the end of 2012 is flattening out gently. This could possibly be an early sign of an encouraging development in 2013. However, risks should not be underestimated," said ZEW President Wolfgang Franz. In addition to weak euro-zone demand for German exports, the German economy is also burdened by weakening growth dynamics in other countries, he said. The ZEW current conditions index fell to 21.1 from 33.2 in June.
The European Central Bank (ECB) has reportedly advocated imposing losses on holders of senior bonds issued by Spain`s most troubled banks. But, European finance ministers have reportedly rejected ECB`s advice on Spain out of fear financial markets would react badly. As per reports, ECB`s new position was presented by ECB President Mario Draghi at a meeting of euro-zone finance ministers on July 9. The position is a turnaround from the ECB`s position in 2010, when it successfully insisted that senior bondholders of Irish banks shouldn`t suffer losses.
Germany`s Federal Constitutional Court will announce a decision on lawsuits challenging the country`s participation in the permanent euro-zone rescue fund, the European Stability Mechanism, and the fiscal pact on 12 September 2012. The court held a public hearing earlier this month to examine complaints that participation in the fund and the fiscal pact violated German law by taking some authority over the national budget away from parliament.
The French government is scheduled to hold bond auction on Thursday, 19 July 2012.
Asian stocks edge higher on Tuesday, 17 July 2012, with investors expecting that Federal Reserve Chairman Ben Bernanke will suggest in his semi-annual testimony to the Congress that fresh policy-easing moves are expected soon. Key benchmark indices in Singapore, Japan, China, Taiwan, South Korea, Hong Kong and Indonesia were up by 0.23% to 1.75%.
There are also expectations that China will cut its banks` reserve requirement ratio again soon. Chinese Premier Wen Jiabao said over the weekend that China`s economic rebound isn`t yet stable and hardship may continue for a period of time, according to a state-media report. Wen also pointed to China`s actions to address the economic deceleration. The economic growth rate is still within the government target range set early this year, and stabilization policies are working, Wen was quoted as saying in a Xinhua news agency report.
The comments followed government data released last week showing China`s second-quarter economic growth slowed to 7.6% from a year earlier, compared to 8.1% in the first quarter. It was the weakest rate of growth in more than three years.
Chinese Premier Wen Jiabao on Tuesday said that expanding employment is a top priority for the government as the country`s employment situation is set to grow more challenging.
The minutes of the latest interest-rate meeting of the Reserve Bank of Australia sounded a more positive signal on the Australian economy and also said that financial market tensions have eased a bit.
Japanese Finance Minister Jun Azumi on Tuesday stepped up his vigilance in response to the yen`s rise to a one-month high against the dollar, which he considers driven by speculation, indicating he will consider intervening in the currency market should the rise continue. The yen`s recent rise "doesn`t reflect economic fundamentals," as speculators are building positions in response to the uncertain outlook of the US. economy, Mr. Azumi said at a regular press conference.
The Bank of Japan (BoJ), last week, left ultra-low interest rates unchanged at its policy meeting. The BoJ reaffirmed its commitment to steadily increasing the size of its asset purchase program, but didn`t announce any immediate increase in the overall size of the program.
The Asian Development Bank said in a report released on 12 July 2012 that weaker global demand is helping ease international oil and food prices in Asia, which is reducing inflationary pressures in the region. The bank trimmed its inflation forecast for developing Asia for this year to 4.4% from 4.6% previously. It cut its inflation forecast for China this year to 3.7% from 4% previously.
The World Bank last week revised down its 2013 Indonesia growth forecast to 6.4% from 6.5% a month ago, but said a severe global downturn could send growth tumbling even further to 4%.
Trading in US index futures indicated that the Dow could gain 55 points at the opening bell on Tuesday, 17 July 2012. US stocks fell on Monday after macro economic data showed an unexpected decline in retail sales in June. The Dow Jones Industrial Average fell 49.88 points, or 0.39%, to 12,727.21. The S&P 500 index dropped 3.14 points, or 0.23%, to 1,353.64 and the Nasdaq Composite index lost 11.53 points, or 0.40%, to 2,896.94. A Commerce Department report showed US retail sales fell 0.5% in June, below market expectations of a rise.
Data on US consumer price index for June 2012 and the July US home builders index are due for release later in the global day today, 17 July 2012.
Federal Reserve Chairman Ben Bernanke testifies before the Senate banking committee on Tuesday, 17 July 2012 and the House Financial Services committee on Wednesday, 18 July 2012. The Fed`s Beige Book report is slated for release on Wednesday, 18 July 2012. A report from Federal Reserve Bank of Philadelphia is due for release on Thursday, 19 July 2012.
Quite a few prominent US companies report Q2 June 2012 earnings this week. Johnson & Johnson Inc., Coca-Cola Co., Goldman Sachs Group Inc., Intel Corp., and Yahoo Inc. report Q2 results on Tuesday, 17 July 2012. Honeywell, Bank of America Corp., IBM and Qualcomm Inc. report Q2 results on Wednesday, 18 July 2012. Microsoft Corp. and Google Inc. report Q2 results on Thursday, 19 July 2012. Wrapping up the week, General Electric Co. reports Q2 results on Friday, 20 July 2012.
The International Monetary Fund on Monday reduced its outlook for 2013 global growth to 3.9% from an April forecast of 4.1%
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